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Judgment
Shreesha Merla, Member (T)
Challenge in this Company Appeal (AT)(Insolvency) No.34/2022 is to the impugned order dated_12.10.2021 in Company Appeal IBC/01/ND/2021 connected with Company Petition (IB)-323/ND/2019 passed by the Adjudicating Authority, National Company Law Tribunal, Court V, New Delhi, dismissing the Appeal preferred by the Appellant herein against the decision of the Liquidator, rejecting the Claim due to delay in filing of the same.
Succinctly put, the facts in brief are, that the Appellant gave an unsecured loan of Rs.4,84,00,000/- in January, 2016 to the ‘Corporate Debtor’. While so, CIRP was initiated against the Corporate Debtor 29.8.2019 and the Liquidation Application was admitted on 29.07.2020, pursuant to which, the Liquidator proceeded with the Public Announcement on 01.08.2020, giving the last date for submission of Claims as 28.08.2020. The Appellant filed its Claim in form D on 29.10.2020 and the Claim was received by the Liquidator on 31.10.2020. It is averred that the Liquidator vide Email dated 09.12.2020 rejected the Claim on the ground that the claim was received belatedly after the lapse of the last date. The Appellant filed an Appeal before the Adjudicating Authority challenging the decision of the Liquidator placing reliance on Section 42 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘I&B Code’).
The Adjudicating Authority while dismissing the Appeal observed as hereunder:-
“11. While applying aforementioned provisions over the facts of the present case, it is noted that the present appeal can be filed within fourteen days from the date of receipt of decision of Rejection from the Liquidator, however, the appeal has been filed after 22 days (appeal filed on 31.12.2020 while the rejection was on 09.12.20) which is beyond the time provided in Section 42 IB. Further, there is no rebuttal on the point that the Appellant being husband of the Suspended Director of CD had knowledge of the ongoing CIRP proceedings.
We do not find any merit in the pleas taken by the Appellant. Therefore, in the light of the well settled law, the Appellant is unable to show the sufficient cause for condoning the delay in submitting the claim by the Appellant; therefore, the prayer is rejected.”
Submissions of the Appellant:
• The Learned Counsel strenuously contended that upon directions of the Adjudicating Authority the Appellant filed an Affidavit dated 16.03.2021, in which it was deposed that the Appellant had come to know about the Notice of Liquidation Proceedings only in the month of October, 2020 and did not have any knowledge regarding the Public Announcement.
• The Appellant being a Senior Citizen, could not, during the pandemic, immediately meet/contact any counsel or collate the data for filing of the Claim as the said data was lying in his Office which was physically shut down on account of the Covid19 situation. It was only in the last week of October, 2020 that the Appellant became aware of the Liquidation Proceedings and was able to collate the required data.
• The Liquidation Proceedings till date has not reached the stage where the Assets of the Corporate Debtor are distributed and hence no prejudice would be caused if the Claim of the Appellant is adjudicated and admitted.
• The Learned Counsel relied on the order dated 08.2.2021 passed by the Hon’ble Supreme Court in Suo Moto Writ Petition (Civil) No.3 of 2020 in which it was held as follows:
“It is further submitted that Respondent wrongly stated that order dated 08.02.2021 passed by the Hon’ble Supreme Court in Suo Motu Writ Petition (Civil) No.3 of 2020 is not applicable to the case in hand. It was specifically held that:-
…..2. In cases where the limitation would have expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply.”
• It is contended that the ratio of the Hon’ble Supreme Court in ‘GPR Power Solution Pvt. Ltd.’ Vs. ‘Mr. Supriyo Chaudhari’ Civil No.6553 of 2021 dated 29.11.2021 reported in 2021 SCC OnLine SC 1328 is applicable to the facts of this case as it was held that the Order 22.3.2020 passed by the Hon’ble Apex Court was in effect till 14.03.2021 and hence the said period of Limitation from 22.3.2020 till 14.03.2021 is to be excluded. The Learned Counsel placed reliance on the directions given by the Hon’ble Apex Court in the aforenoted Judgement, that all litigants whose limitation expired after 22.03.2020 would be entitled to extension of limitation till the 90th day from 15.03.2021. The Learned Counsel submitted that the Order of NCLAT in dismissing the Appeal, without considering the effect and impact of the Orders of the Hon’ble Supreme Court in Suo Motu Writ Petition, was set aside.
• It is submitted that the Appellant had showed ‘sufficient cause’ for not submitting the claim within the prescribed time limit as the Appellant was not aware of the Liquidation of the Corporate Debtor. The Learned Counsel also drew our attention of the relevant portion of the Affidavit filed before the Adjudicating Authority in support of his case.
Submissions of the Respondent:
• The Learned Counsel appearing for the Respondent contended that the last date of submission of the claim as stated in the ‘Public Announcement’ was 28.08.2020 and the Respondent/ Liquidator rejected the claim as it was received on 31.10.2020 after the 30 days’ time limit prescribed under the provision of the Code and the Liquidation Process Regulations, 2016.
• The Adjudicating Authority has rightly dismissed the Appeal as it was filed 22 days beyond the time provided for under the Code and also on the ground that there was no rebuttal on the point that the Appellant, being the husband of the suspended director of the Corporate Debtor, had knowledge of the ongoing CIRP proceedings.
• The Learned Counsel placed reliance on Section 38 of the Code which provides for consolidation of the Claims and Section 38 sub-Section (1) provides that ‘the Liquidator shall receive or collect the claims of the creditors within a period of 30 days from the date of the commencement of the liquidation process…..’.
Further Regulation 12 (2)(b) of the Liquidation Process Regulations, 2016 provides that the Public Announcement issued by the Liquidator shall provide the last date for submission or updation of claim, within 30 days from the commencement date.
• The Code provides the fixed time line for each and every activity to be performed by the Liquidator and the Liquidator is not empowered to condone the delay in receipt/collation of the Claims from the Creditors in terms of the Code.
• Delay under Section 42 of the Code can only be condoned if the Appellant is able to show ‘sufficient cause’ in filing the Claim belatedly. The Learned Counsel placed reliance on the following judgments in support of his case :
o Ramlal V. Rewa Coalfields Ltd AIR 1962 SC 361
o State of West Bengal Vs. Howrah Municipality AIR 1972 SC 749
o Assistant Commissioner of Commercial Taxes Vs. Right Engineers & Equipment India (P) Ltd (Company Appeal (AT)(Ins) No.255 of 2021.
• It is strenuously argued that the Appellant is a related party to the ‘Suspended Director’ of the Corporate Debtor and has deliberately not filed the Claim within the stipulated time lines and cannot now say that the Appellant was not in the knowledge of the Liquidation Process having filed their objections to the Application filed by the RP before the Adjudicating Authority seeking liquidation of the Corporate Debtor, which was allowed vide order dated 29.07.2020.
Assessment:
It is not in dispute that the last date for submission of the Claims was 28.08.2020 which was specified in the Public Announcement by Liquidation in compliance with Section 38 of the Code read with Regulation 12 of the Liquidation Process Regulations, 2016. Regulation 12(2)(b) provides that ‘the last date for submission or updation of claims, shall be 30 days from the liquidation commencement date’. In the instant case, admittedly the Appellant had preferred their claim on 31.10.2020, after a delay of 64 days. It is the case of the Appellant that the delay was on account of the pandemic situation during which period the Appellant being a Senior Citizen could not contact his counsel and collate the data, apart from not having knowledge of the Liquidation Proceedings.
The Hon’ble Supreme Court taking cognizance of the situation arising out of the challenge faced by the country had directed that in cases where the limitation would have expired during the period between 15.3.2020 till 14.3.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15.3.2021.
Keeping in view the facts of the attendant case and the observations made by the Hon’ble Supreme Court in Suo Motu Writ Petition dated 08.03.2021, this Tribunal is of the earnest view that the delay in filing the Claim before the Liquidator be condoned as this Tribunal is satisfied that the cause ascribed is reasonable and construes ‘sufficient cause’. Without delving into the merits of the Claim, this Tribunal is of the considered opinion that the Appellant be given an opportunity to present his Claim before the Liquidator within a week from the date of this Order. Needless to add, we have not made any observations regarding the issue of ’Related Party’ or otherwise or touched upon the merits of the Claim. The Liquidator shall decide the Admission/Rejection of the Claim within a week from the date of filing of the Claim, in accordance with Law.
For all the aforegoing reasons, the impugned order dated 12.10.2021 is set aside and accordingly this Appeal is allowed with the aforenoted directions.
Company Appeal (AT) (Ins) No.46/2022
Similarly, CA(AT)(Ins) No.46/2022 is preferred by M/s Pepper Craft against the impugned order dated 12.10.2021, whereby the Adjudicating Authority has dismissed the Appeal filed by the Appellant herein seeking to set aside the decision of the Liquidator for rejecting the Claim due to delay in filing of the same. While rejecting the prayer, the Adjudicating Authority has observed as follows:
“While applying aforementioned provisions over the facts of the present case, it is noted that appeal can be filed within fourteen days from the date of receipt of decision of Rejection of Claim, however, the appeal has been filed after 42 days (appeal filed on 17.02.2021 while rejection was done on 06.01.2021), which is beyond the time provided in Section 42 IBC.
Therefore, in the light of the well settled law, the Appellant is unable to show the sufficient cause for condoning the delay in filing the appeal against the rejection of the claim, therefore, the prayer is rejected.”
In the instant case, the Liquidator vide Email dated 06.01.2021 has rejected the Claim on the ground that it was received subsequent to the last date for submission of Claim which was specified to be 28.08.2020 in the ‘Public Announcement’ made as per Regulation 31(2) of the Liquidation Regulations, 2016. A perusal of the material on record shows that the Appellant has filed an Affidavit before the Adjudicating Authority, dated 16.03.2021, that on account of the ongoing Covid 19 pandemic and taking care of the elderly having co-morbidities, she could not immediately meet or contact a Counsel or collate the required data. She was able to collate the data only in the last week of October, 2020 and the Claim was sent through Email. On being informed that the Claim was not delivered to the Liquidator, once again it was submitted through Email on 05.01.2021.
The Adjudicating Authority has rejected the prayer on the ground that the Appellant has filed the Appeal against the decision of the Liquidator with a delay of 42 days. Having regard to the reasons cited in Company Appeal (AT) (Insolvency) No. 34 of 2022 and in the Affidavit filed before the Adjudicating Authority, this Tribunal is satisfied that the grounds raised construe ‘sufficient cause’, to condone the delay in filing of the Appeal before the ‘Adjudicating Authority’. We find it a fit case to grant an opportunity to the Appellant herein to file their Claim before the Liquidator within a week from today and the Liquidator shall decide the Admission/Rejection of the Claim on merits, within a week from receipt of the Claim, in accordance with Law. It is reiterated that this Tribunal has not made any observations regarding the merits of the Claim.
This Appeal is allowed with the aforenoted directions.
The Registry is directed to upload the Judgement on the website of this Tribunal and send a copy of this Judgement to NCLT (National Company Law Tribunal, New Delhi) forthwith.